Removal of discrimination in taxes on raw material imports urged

Karachi, May 11, 2015 (PPI-OT): Mr. Waseem Vohra, Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the Chairman, Federal Board of Revenue (FBR), Mr. Tariq Bajwa, to do away with the discrimination in duties and taxes between commercial and industrial importers of raw material as the raw material is ultimately consumed by the industry -either small, medium or large scale- and as such causes corruption, creates distortion in promotion of tax culture and is prone to misuse.

This he said while chairing a meeting in FPCCI with the delegations of Pakistan Yarn Merchants Association (PYMA) and Pakistan Chemicals and Dyes Merchants Association who made a courtesy call to apprise him of the problems and issues being confronted by their members.

The FPCCI Vice President referring to SRO 1125(I)/2011 elaborated that a commercial importer of polyester filament yarn, a basic raw material for the domestic fabric industry, is additionally subject to Value Added Tax (VAT) @ 2% and withholding Income Tax @ 3% due to which his cost of import is @ 4.51% is higher than that of industrial importer which is subject to value added tax (VAT) @ 0% and withholding income tax @ 1% only.

“This is a sufficient incentive and motivates the unscrupulous commercial and fake industrial importers to import the raw material under the guise of manufacturers thus rendering the genuine commercial importers uncompetitive besides, making the national exchequer to suffer from heavy losses as more than 70% of the domestic demand of Polyester Filament Yarn is met through imports”, he added.

The members of the delegation urged to do away with the distinction between finished goods importer and raw material plus machinery importer as they facilitate the import substitution and export oriented industries, therefore, the FBR in policies should facilitate these importers by allowing such type of importers the same Benefits as allowed to Industry.

The members of the delegations of the PYMA and PCDMA Associations lamented that immunity from Audit to Commercial importers even after payment of 3% VAT at import stage has been withdrawn by omitting Clause 58-E(2) from Special Procedure for Payment of Sales Tax by Commercial Importer Rule 2006 vide Finance Act 2012. They therefore, proposed that Clause 58-E(2) pertaining to immunity of audit to commercial importers be restored.

The Chairman of PCDMA, Mr. Haroon Nisar Numberdar proposed to withdraw Customs Guideline Prices which have been issued unilaterally without consultation of respective associations and due to these Prices the consignment is shifted from green channel to red channel and takes 3 to 4 working days for clearance. He also urged that the 1% sales tax on sales to unregistered person be done away with as it is un-adjustable and promoting flying and fake invoice culture therefore, sales to unregistered person be allowed.

Mr. Zubair Tufail, Chairman, FPCCI Standing Committee on FBR Affairs disclosed that about 90% of the concessionary SROs would be rescinded in the next budget and only SROs related to POL, Pharmaceutical and Foods Items would be retained; discrimination in income tax between commercial and industrial importer would be removed; commercial importer would not be subjected to audit. He agreed to take-up the issues of Turn-Over Tax levied @ 1% under SRO 2333/2011 for its reduction to 0.1%.

For more information, contact:
M. A. Lodhi
Secretary General
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Karachi-75600, Pakistan
Tel: +92-21-35873691, 93-94
Fax: +92-21-35874332

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